Crypto.com CEO Dismisses Speculation About Financial Troubles, Says FTX Exposure Is Minimal
Expect a tough crypto winter, but Crypto.com is not going anywhere, CEO Kris Marszalek said in a live interview hosted on his YouTube channel.
Over the past week, Crypto.com’s CRO token has fallen nearly 45% on fears the Singapore-based exchange could be next to face a liquidity crunch. The exchange’s daily volume has slumped from last year’s highs of around $4 billion to around $284 million last October, according to data from Nomics, and withdrawals are on the rise. rise as users and investors withdraw their funds from the platform.
In the interview, Marszalek reiterated that the exchange has a strong balance sheet and said its exposure to FTX is limited to $10 million.
“We recovered $990 million from FTX,” Marszalek said, noting that the flow of funds between exchanges is a necessary part of the business.
A Crypto.com audit is underway, but it will take time. Auditing firms “don’t work at the speed of crypto,” he said, pointing out that both Crypto.com and the industry need full transparency to move forward.
Withdrawals are working as expected, he reiterated. The only stop was related to GALA, SRM and Ray.
“SRM is closely related to FTX,” he said.
Marszalek said CRO, Crypto.com’s token, has never been used as loan collateral, unlike the relationship between FTX and Alameda and FTX’s token, FTT.
“We’re never going to raise funds,” he added, saying the company is cash flow positive.
One of Crypto.com’s most controversial moves has been stadium sponsorship, with sky-high prizes. There are questions about the effectiveness of all of this as a sales funnel. Marszalek says it’s a worthwhile investment, reminding people that contracts are paid annually.
“We pay a small sum each year, which represents around 10% of our turnover. It’s not crazy compared to other companies,” he said. “Growth to 70 million users is not possible without investing in brand awareness.”
Part of the market’s mistrust of Crypto.com may stem from the exchange’s recent $400 million crash, where it accidentally sent ether to an account on an exchange called Gate.io . It was the second time the company mistakenly transferred an amount of several million. In August, it was revealed that the exchange had sent $10.5 million to a woman in Melbourne and it had taken seven months to find out.
Marszalek explained that all addresses for transfers from these scales are whitelisted and approved. The destination address was Crypto.com’s corporate account at Gate.io, and the funds were returned after Gate.io increased the corporate account’s daily transfer limit.
“The funds were in no danger of being lost,” Marszalek said. “The system wouldn’t allow us to send money where it can’t be collected.”
While some on crypto Twitter speculated that this was part of a plan to bolster Gate.io’s holdings before the release of its proof of reserves, Marszalek said that was not the case.
As for the Crypto.com critics, Marszalek says he is eager to prove them wrong with actions and words.
“Their allegations have no basis,” he said.